Lew says lawmakers should stay out of financial council’s meetings

Treasury Secretary Jacob Lew on Tuesday pushed back against a pair of House Republican bills that would affect the workings of the Financial Stability Oversight Council, including one that would allow members of Congress to sit in on the council’s meetings.

Lew testified before the House Financial Services Committee about the council’s latest report and defended the FSOC’s work in front of skeptical Republicans, who say the council has too much power and too little transparency.

Rep. Scott Garrett, a New Jersey Republican, complained to Lew: “I’m not allowed to even sit quietly and listen in on an FSOC meeting.” Garrett called the council’s decision-making process a “black box.” Garrett has sponsored legislation allowing members of Congress into the council’s meetings.

Lew replied participation by members of Congress in executive-branch meetings is “not considered the norm.” He added, “I don’t think it’d be appropriate here, either.”

Garrett’s bill and a separate bill from Rep. Randy Neugebauer of Texas have little chance of being enacted by Congress, given Democrats’ control of the Senate. Neugebauer’s legislation would stop the council for one year from designating non-bank financial companies as systemically important. The designation subjects the companies to oversight by the Federal Reserve.

The FSOC was created by the 2010 Dodd-Frank law, and is chaired by Lew. Its members also include the heads of the Federal Reserve and Securities and Exchange Commission.

Lew separately said he could not tell members whether the era of “too big to fail” banks is over. Republicans say the designation by FSOC as systemically important signals to markets that the government believes such firms are too big to fail – and thus puts taxpayers on the hook for a bailout.